ICCI shows concerns over declining performance of economy

Islamabad Chamber of Commerce & Industry has shown great concerns over the declining performance of economy as all major sectors of large scale manufacturing have shown falling growth  and called upon the government to take urgent policy measures to turn around the economy in order to save the country from further problems.

M. Shakeel Munir, Acting President, Islamabad Chamber of Commerce & Industry said that LSM sector contributes significantly to the economic development of the country as it accounts for 70 percent of industrial production. However, its growth of just 1.86 percent during the first quarter of the current fiscal year (July to September 2014) should be a cause of serious concern for the government authorities as it will affect economic growth and bring more problems in the form of low exports & tax revenue as well as few employment opportunities.

He said strong performance of manufacturing sector was key to support the country’s productivity, but growth of major sectors of LSM including textiles, food & beverages, pharmaceuticals and petroleum etc. remained below 3 percent during the first quarter, which was disappointing. He said textiles sector contributed more than 90 percent to LSM, but its growth of 1.03 percent was quite disturbing, especially after the grant of GSP Plus status by the European Union.

He said Pakistan’s trade deficit widened by 45 percent and exports reportedly declined by 10.1 percent in the first quarter of current fiscal year. It shows that government could not achieve its macroeconomic targets during the first quarter except for fiscal deficit, which was also attained by making hefty cut in the PSDP.

Shakeel Munir said private sector credit was an important indicator of economic growth and reflected investors’ confidence in the economy as increased credit to private sector helps in expanding business activities and overall GDP of the country. However, private credit grew by only 5 billion in the first quarter of the current year as compared to 32 billion rupees in the comparable period of last year, which was enough to show that the economy was not heading towards the direction of strong growth.

He called upon the government to address all issues of economy on priority and take appropriate policy actions designed to fuel the better economic growth rate that will help in generating more employment, enhanced export revenue and reduced reliance on domestic and foreign borrowings.